Case Experion Developers Pvt. Ltd. Versus Sushma Ashok Shiroor  

SC in a recent case decided on 07.04.2022 takes a very liberal view in favour of home buyers who invested their hard earned money in developers project but does not get possession within stipulated time

No new theory evolved in this case but made it clear that commission has the power to give relief what the home buyer choses. Home buyer is free to make any prayer and commission may grant the same if merits so permit

SC has allowed three fold choices to the home buyer who has not been given possession of dwelling within stipulated time frame

SC has allowed three fold choices to the home buyer who has not been given possession of dwelling within stipulated time frame

1. The power to direct refund of the amount and to compensate a consumer for the deficiency in not delivering the apartment as per the terms of Agreement is within the jurisdiction of the Consumer Courts  A consumer can pray for refund of the money with interest and compensation

2.  The consumer could also ask for possession of the apartment with compensation.

3. The consumer can also make a prayer for both in the alternative.  If a consumer prays for refund of the amount, without an alternative prayer, the Commission will recognize such a right and grant

“The freedom to choose the necessary relief is of the Consumer and it is the duty of the Courts to honour it.”

The above order makes the position clear that home buyer can be given compensation in all the situations whether asks for refund with interest& compensation or possession with delayed compensation

Three issues before the SC

I.                   Whether the Commission has the power under the Consumer Protection Act, 1986 to direct refund of the amount deposited by the Consumer with interest when developer ready to give possession

II.                Whether the terms of the Apartment Buyers Agreement amount to an ‘unfair trade practice’ and

III.             Whether Commission is justified in referring Pioneer Case which was mainly decided under on RERA Act 

HELD;

A)    Order for interest justified  (Issue -1)

 

Referred cases

In LDA v. M.K. Gupta, this Court held that when a person hires the services of a builder, or a contractor, for the construction of a house or a flat, and the same is for a consideration, it is a “service” as defined by Section 2(o) of the Consumer Protection Act, 1986. The inordinate delay in handing over possession of the flat clearly amounts to deficiency of service.

 In Fortune Infrastructure v. Trevor D’Lima, this Court held that a person cannot be made to wait indefinitely for possession of the flat allotted to him, and is entitled to seek refund of the amount paid by him, along with compensation. the money deposited by him along with appropriate compensation.  

 

Wing Commander Arifur Rahman Khan and Aleya Sultana & Ors. v. DLF Southern Homes Private Limited (2020) 16 SCC 512

SC held that there is no embargo on the award of compensation beyond the rate stipulated in the Apartment Buyer’s Agreement where handing over the possession of the flat has been delayed. The Court observed that the Consumer Forums must take a robust and a common-sense approach by taking judicial notice of the fact that flat purchasers obtained loans and are required to pay EMIs to financial institutions for sub serving their debts.

 

DLF Home Developers Ltd. v. Capital Greens Flat Buyers9. 8 NBCC (India) Ltd. v. Shri Ram Trivedi (2021) 5 SCC 273 9 DLF Home Developers Ltd. v. Capital Greens Flat Buyers Association & Ors. (2021) 5 SCC 537

 

“the compensation could be granted even if possession had been delivered.”

B)    Developer unfair for one sided clauses  and loaded in favour of Developer (Issue No 2)

 

Referred cases

 

IREO Grace Realtech (P) Ltd. V. Abhishek Khanna & Ors. (2021) 3 SCC 241

 A three-judge bench of this Court in noticed the delay compensation clause, which is similar to the clause in the present case, which provided that the Developer would be liable to pay delay compensation @ Rs 7.5 per square foot which works out to approximately 0.9 to 1% p.a. The Court held that this Clause is one-sided and entirely loaded in favour of the Developer and against the allottee. The Court concluded that the powers of the Consumer Court were in no manner constrained to declare a contractual term as unfair and one-sided as an incident of the power to discontinue unfair or restrictive trade practices.

C)    Poineer Case well applicable (Issue -3)

Referred Law

·         Real Estate (Regulation and Development) Act, 2016 - Consumer Protection Act and the RERA Act neither exclude nor contradict each other -

·         In terms of Section 18 of the RERA Act, if a promoter fails to complete or is unable to give possession of an apartment duly completed by the date specified in the agreement, the promoter would be liable, on demand, to return the amount received by him in respect of that apartment if the allottee wishes to withdraw from the Project. Interpretation of Statutes - When Statutes provide more than one judicial fora for effectuating a right or to enforce a duty-obligation, it is a feature of remedial choices offered by the State for an effective access to justice. Therefore, while interpreting statutes provisioning plurality of remedies, it is necessary for Courts to harmonise the provisions in a constructive manner.

 

 

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